As Many CADx systems have been developed to detect lung cancer based on spatial domain features that process only the pixel intensity values, the proposed scheme applies frequency transform to the lung images to extract frequency domain features and they are combined with spatial features so that the features that are not revealed in spatial domain will be extracted and the classification performance can be tuned up. The proposed CADx comprises of four stages. In the first stage, lung region is segmented using Convexity based active contour segmentation. At second stage ROIs are extracted using spatially constrained KFCM clustering. Followed by standard wavelet transforms is applied on ROI so that transform domain features are extracted with shape and haralick histogram features. Finally neural network is trained by combined feature set to identify the cancerous nodules. Our proposed scheme has shown sensitivity of 95% and specificity of 96%.